Jobs face axe in Barclays merger

Wednesday 24 January 2007 00:04 BST

More than 23,000 banking jobs are under threat after Barclays announced details of its proposed £45 billion takeover of Dutch counterpart ABN Amro.

Barclays said it would look to cut 12,800 jobs from the combined workforce, while another 10,800 positions were likely to be transferred to lower-cost locations. The two companies have a joint workforce of 217,000 worldwide, including 62,400 staff who work for Barclays in the UK.

While the merger agreement was being unveiled on Monday, ABN Amro admitted it would still meet Royal Bank of Scotland, which is mulling a rival approach in conjunction with Spain's Santander and Fortis of Belgium.

The title of the UK's second largest banking group, held by RBS, is at stake through the ABN Amro merger. Monday's agreement could lead to the world's biggest financial services takeover, as well as one of the largest cross-border deals.

Analysts refused to rule out a higher bid from RBS, even though the takeover offer from Barclays is at a 33% premium on the ABN Amro price prior to last month's confirmation of talks involving the two parties.

RBS said it was requesting information from ABN Amro about the circumstances under which the LaSalle agreement with Bank of America can be terminated.

Alex Potter, an analyst at Collins Stewart stockbrokers, said: "We believe there is little rush for the consortium - when RBS bid for NatWest, they did it some weeks after Bank of Scotland made its initial tilt at NatWest. This strategy could be replicated here."

The plans by the RBS consortium could see Santander take on ABN Amro's Italian and Brazilian divisions and Fortis run ABN's retail banking operations in Holland and Belgium.

The merger plan at present will see Barclays shareholders own a 52% stake in the new business, which will be called Barclays but would have its headquarters in Amsterdam. The proposed merger is expected to complete during the fourth quarter of this year, with Barclays chief executive John Varley set to lead the combined group.

The combination with ABN Amro will create a business with 47 million customers, around 90% of whom are in just seven countries. It will be the world's largest institutional asset manager, as well as the eight largest wealth manager.